He based the decision on personal assurances from the Rwandan president and on his own experiences running a small Conservative "charity" project in the country.
Officials were told his personal experience with Project Umubano outweighed evidence from a group of experts from the UN, Human Rights Watch observers and Foreign Office officials.
The Sunday Telegraph has learned that the UN and EU privately expressed their "disappointment" with Mr Mitchell's decision at a hastily convened international contact group meeting at the Foreign Office last month.
A source at the meeting said there were "obvious differences" between Foreign Office officials and "between different officials in the Department for International Development".
Mr Mitchell apparently also ignored police intelligence reports that suggest Rwandan dissidents living in exile in Britain are being targeted by the regime.
Last year the Metropolitan Police took the unusual step of issuing the Rwandan exiles with formal warning notices stating that "the Rwandan government poses an imminent threat to your life".
The United Nations and Europe have both accused President Kagame of giving support and weapons to the so-called 23 March Movement (known as M23) in the Democrat Republic of Congo, accusing it of attacking civilians and "acts of sexual violence".
At a meeting at the UN in New York last week the EU directly accused Rwanda of backing the M23 rebels. President Kagame and senior figures in his regime may now face sanctions over their links to the group and human rights abuses it has carried out.
Two new confidential reports on Rwanda's involvement with the M23 rebels were presented to Security Council officials last week and are likely to lead to further action being taken against the regime at the UN in the next few weeks.
A UN source said: "Britain's position has come as a bit of a disappointment to those who are trying to alter the position on the ground. Everyone else is united in putting pressure on Rwanda."
Britain is Rwanda's largest aid contributor and the source said its involvement in bring pressure to bear on President Kagame was "vitally important".
Internal documents from DfID, released under the Freedlom of Information Act, reveal that in a February 2011 telephone conversation, Mr Mitchell had promised the Rwandan president that Britain would increase its aid from £60m to £90m by 2015. Two months earlier, he had flown to Rwanda for a "90-minute tete-a-tete followed by lunch" with the newly re-elected president.
But the memos also reveal doubts within the department about the "political risk" in Rwanda. Mr Mitchell's ministerial colleague, Stephen O'Brien, highlighted international concern about human rights in Rwanda.
Justine Greening, the new International Development Secretary, must now decide whether Rwanda should receive the second tranche of the money promised by Mr Mitchell. Her office did not respond to requests for comment last night.
It is understood that Mr Mitchell based his decision to continue aiding Rwanda on "personal assurances" from Mr Kagame who had previously attended the Conservative conference and lavished praise on Project Umubano calling it an "unprecedented" example of aid. He is also understood to claim, though, that the decision was later agreed by Downing Street.
The Conservatives' Rwanda project was Mr Mitchell's personal brainchild but was designed to show the caring side of Mr Cameron's Party when it was in opposition.
Now also working in Sierra Leone, the project has seen more than 200 Tory supporters, including Mr Mitchell, his wife Sharon and their daughter Rosie, fly to Rwanda for two-week stints to help as the country slowly recovers from the genocide which saw an estimated 800,000 people murdered there in 1994.
Mrs Mitchell, a GP, has also spent several months working as a doctor in Rwanda.
The Prime Minister praised the project as "the first time that any British political party had engaged in a social action project in the developing world".
He said he and Mr Mitchell had set it up "to raise awareness of global poverty and play a small part in tackling it on the front line".
Yesterday a Conservative spokeswoman said the project, which includes an annual Tories versus locals cricket match, had "provided English lessons to over 3,000 Rwandan primary school teachers, renovated a school, established a small medical library and built a community centre".
Conservative volunteers, including ministers, MPs, Parliamentary candidates and local councillors, pay their own airfares, but much of the start up money for the project came from a wealthy widow from Hove, Helena Frost.
Despite having little interest in politics, according to her family, Mr Mitchell personally persuaded Mrs Frost to provide the funding. Electoral Commission files show that before her death last November, she gave the party £250,000 in donations - £200,000 of which went to fund Mr Mitchell's office in opposition and £50,000 directly to the Rwanda project.
Last night, Mrs Frost's nephew Mark, who was close to his aunt and often accompanied her to charitable events, said he was "slightly taken aback" that she gave so much.
He said: "It would appear Mr Mitchell (was) very charming and very persuasive. It was quite a large sum which doesn't necessarily seem to fit with the amounts she ordinarily gave to the many other charities she supported.
"She was not one to meddle in politics at all and was convinced the money was going to help the poor. She would have not have given money to politicians for political use or gain, she had understood that she was helping the poor in Rwanda."
He added: "This was a private matter and she was reticent about this particular charitable donation.
"She was a wonderful woman who had a great passion for certain causes and for many people. I can only imagine that this may have been the case on this particular case for her to have contributed such large sums to a single cause."
He said Mr Mitchell had been introduced to her through another charity that he was involved with and to which Mrs Frost, who had a considerable personal fortune and had also set up a £6 million charitable foundation in the name of her late husband Patrick, had contributed large sums.
